Cheques and bankers’ drafts

A consumer may complain that, after crediting their account with a cheque they’d paid in, you later debited their account because: 

• the paying bank returned the payment 
• you lost the cheque during processing

This may cause your customer a problem if they thought the payment had cleared and therefore: 

• withdrew money they thought they had
• provided an item or service to a buyer

Consumers may complain about a cheque they wrote to pay someone else, because: 

• you returned it unpaid
• you made the payment even though they’d cancelled the cheque

Sometimes consumers complain that: 

• someone has stolen and cashed a cheque they wrote for someone else
• you paid a cheque from their account that they didn’t sign or authorise
• they paid a cheque into their account, but you didn’t credit them with the amount because you said it was stolen or forged

For these complaints, see our guidance on disputed transactions. 

Consumers often treat bankers’ drafts as being ’as good as cash’, but they're sometimes stolen or counterfeited. A customer may complain they they paid a draft into their account and you later returned it unpaid because it was fraudulent. 

Sometimes customers complain that they lost a draft you issued them and then you refused to pay them a refund or imposed difficult conditions on the refund. 

We’ll usually look at: 

• how the cheque came to be paid into the account
• the account’s terms and conditions
• the cheque-clearing cycle
• any discussions you had with your customer before returning the cheque unpaid
• any steps your customer took before discovering you’d returned the cheque unpaid

If a consumer complains that you lost a cheques during processing, we’ll ask to look at your records so that we can see whether you caused or contributed to the loss. 

We’ll usually look at: 

• the terms and conditions of your customer’s account 
• the position of your customer’s account (including any overdraft facility) at the time the cheque was paid in by the recipient
• any discussions you had with your customer about whether or not you’d pay the cheque
• any information you gave to third parties about the reason for not paying the cheque
• any history of similar situations on the customer’s account
• the underlying transaction and the effect of not paying the cheque or wrongly paying it

If you’ve returned a bankers’ draft unpaid because it was fraudulent, we’ll usually look at: 

• any discussions you had with your customer when they paid in a draft
• what options the customer would have had if you’d identified the problem earlier

If your customer has lost their draft and they’re complaining about the difficulty in getting a refund from you, we’ll usually look at the: 

• terms and conditions covering the issue of the draft
• circumstances in which the draft was lost – so that we can assess the likelihood of a third party making a valid claim on the draft

If we decide you were at fault, we’ll generally tell you to put your customer back into the financial position they would have been in if you’d handled things correctly. 

If we decide you were at fault, we may ask you to: 

• honour your customer’s unpaid cheque
• refund your customer with the money you wrongly paid to someone else

Where you’ve wrongly returned a cheque unpaid, we may ask you to compensate your customer for: 

• a non-financial loss, such as embarrassment or loss of trust or reputation
• consequential loss, such as the loss of a supplier or loss of profit if your customer is a small business

If you’ve not treated your customer fairly, we’ll take into account the individual circumstances when deciding how to put things right. This might include telling you to: 

• issue a replacement draft
• recredit your customer’s account with the money the draft represents
• pay compensation to reflect
  • a non-financial loss, such as embarrassment or loss of trust or reputation
  • consequential loss, such as the loss of a supplier or loss of profit if your customer is a small business